Hello readers,

How Indian markets performed in 2014 vis-à-vis world markets:

Before we get into 2015, let’s look back and see how the Indian markets performed in 2014 vis a vis the world markets. The Sensex was up by 30% with respect to 2013 closing levels (from 21170 levels to 27500). US equity market(S&P 500) had a moderate growth at 12.7%. European stock markets didn’t do well with German DAX rising at 3.9% growth and UK’s FTSE in negative zone, as fears of deflation, potential recession & Greece concerns impacted the European markets. Japan was in negative zone (-8.2%) as it slipped into recession and Russian market was the worst performer at -45% with sanctions and crude oil crash dealing a fatal blow .Indian market was the 3rd best performer in the world , only behind Argentina at 54.5% and china at 43.3% . As we witnessed turbulence in almost all markets and economies, India and US were the only markets which attracted lots of global investor attention/ action as these were the only economies which had a positive outlook on GDP growth improvement in 2014 as well as 2015.

How my 2014 model portfolio performed (Top 15 stock picks)

Pl refer to my blog (dated 15th January 2014) where I had mentioned my top 15 stock picks for 2014(model portfolio 2014)..My model portfolio showed excellent gains of 52% versus 30% of Sensex gains. The 3 top gainers were Bajaj Finance(121%), LIC Housing Fin(113%),Axis bank(100%), BOB (67%), and ICICI bank(66%).The only big disappointments was Reliance(-2%) which I sold in middle of the year. My actual 2014 portfolio (with some changes along the year, like removal of few stocks like Reliance, Larsen, Bajaj Auto & addition of few stocks like Yes bank, Dewan housing, Torrent pharma, Apollo tyres, Tata Motors , TCS Kaveri seeds etc.) went up by > 60% while investing in safe and blue chip stocks.

2014 Portfolio results tracker,  as per the data on 5th Jan 2015

Name Gain %
BOB 67%
Axis Bank 100%
ICICI Bank 66%
Reliance -2%
Bajaj-Fin 121%
LIC housing 113%
IDFC 46%
Larsen 45%
REC 50%
Power Grid 39%
GAIL 30%
Coal India 28%
M&M 29%
BAJAJ Auto 28%
HCL 25%
Average Portfolio 52%

Lets see how my 2013 January model portfolio (as per my blog on 1st Jan 2013)performed in 2014 . It had gained 59%(from Jan 2013 to end of 2014)versus 44% of Sensex gains after Jan 2013 , hence again beat the Sensex with a good margin(alpha).

Name Gain %
BOB 26%
ICICI Bank 59%
Bajaj-Fin 154%
LIC 61%
REC 36%
Power Grid 21%
GAIL 26%
M&M 31%
HCL 154%
Lupin 133%
Jain Irrigation -7%
Average Portfolio 59%

My long term forecast of the Indian markets:

I am a long term investor who focuses on long term trends and projections of the economy/ market and the businesses. I would not dare and are to venture into the short or medium term precise Sensex forecast as markets are very unpredictable in short term. However, I would like to repeat that India economy and the market have already started a strong and long term structural bull market in 2014(I had predicted the same in my multiple blogs in 2012 and 2013). There could be small and temporary corrections or fall in the market but the long term trends should be a very positive one for many many years. As far as my long term sensex prediction is concerned, I am predicting Indian market(sensex) doubling up every 4 years for next 15-16 years which means sensex multiplying 16 times in 16 years (reaching about 4,50,000 by end of 2030). This means that you can multiply your wealth 16 times in 16 years just by investing in sensex EFT or index funds . If you do a bit of good stock picking , you can beat this rate and multiply your wealth by 20-30 times by 2030 . This kind of long term wealth creation opportunities can happen only in rare asset classes (like Indian blue chip equities ) in the world. The economic and investment cycles have bottomed and will show a sustained long term positive trend from now. The macro variables have improved a lot with CPI inflation at <5% , Fiscal and Current account deficits under good control,stable government showing positive signs of reforms,  growth in 2014 picking up at 5.5% versus <5% in previous 2 years, much more stabler currency etc .Biggest short term or medium term risk are mostly domestic ones like disappointing 2015 budget, tardy and slow pace of reforms and execution by Modi Government and few global ones like US Fed bank raising the interest rates too soon in 2015 or Europe slipping into recession.

As per my tradition in last few years , I am publishing my top 15 stock picks for 2015(model portfolio 2015) in which I am investing now . Now onwards, I will publish a mid year model portfolio too in case I end up dropping a few businesses/stocks or adding a few new ones.

My 2015 Portfolio of Top 15 business/ stock picks(stock related data as per 31st Dec 2014) :-


 Click Image To Enlarge.

The 2015 model  portfolio is heavily loaded towards Banking & Finance(BOB, Yes Bank, Bajaj Finance, Dewan Housing), It also has Auto sector(Apollo tyres, Tata Motors ), Infrastructure/ Power sector(REC , Coal India, NMDC) , IT sector(HCL and Tech Mahindra) and Pharma stocks(Torrent and Aurobindo pharma) . These sectors are either domestic interest sensitive and capital intensive sectors like B&F, Auto, Infra/ Power or are Global defensives like IT and Pharma . All these businesses are quality businesses with durable competitive advantage with excellent returns on capital(ROE), strong balance sheet, competent managements and stable growth records (in last 3 to 5 years) and yet available at under-valued or fair prices, providing a great “margin of safety” for value and long term investors . The other thing you would notice is that all these companies are blue chip companies(mostly large caps and few mid caps with market capitalization of > 5000 Crore.). This is for reducing risks associated with small caps and smaller midcaps like corporate governance issues, non-transparency, share price rigging, share pledging by promoters, excessive volatility etc which can make you lose your capital permanently. Though the market (Sensex) has attained new peaks and have shot up >30% in last year , this rally is a long term structural bull rally and therefore any fall or correction would be temporary and should be treated as a good opportunity to invest in quality stocks or businesses for long term with a long term returns of 20-25% per year (on an average)

Wish you a very happy New Year again and Happy investing,

Cheers Amar